Euro zone economic sentiment falls to near 3-year low

BRUSSELS Wed May 30, 2012 6:03am EDT

BRUSSELS (Reuters) - Euro zone economic sentiment fell more than expected in May, as pessimism among manufacturers and retailers in particular worsened, although consumers became slightly less downbeat about the economy for the year ahead.

The European Commission's economic sentiment index slipped by 2.3 points in the 17-nation euro zone to 90.6, lower than the 92.0 point average forecast in a Reuters poll of 33 economists. It was the index's second consecutive monthly decline and the lowest level since October 2009.

Sentiment fell in every euro zone country except Austria and Malta. There was no data for Ireland.

For the single currency area as a whole, the mood was worse for all business sectors - industry, services, retail and construction.

For consumers, sentiment picked up mainly due to less gloom regarding the outlook for the economy as a whole and for the labor market, households' financial situations and their prospects of making major purchases in the next year.

However, consumers became more pessimistic in Cyprus, Italy, Malta, the Netherlands, Slovakia and Spain.

The Commission's business climate indicator for the euro area also fell in May, by 0.26 points to -0.77, worse than the Reuters poll average forecast of -0.66 and its lowest level since December 2009.

The report said the decline was due to a more negative assessment of all components - past and future production, order books, export order books and stocks of finished goods.

(Reporting by Philip Blenkinsop; editing by Rex Merrifield)